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Supply Chain News: Airbnb for the Warehouse Market Raises Big Money

 


Seattle-Based Flexe Raises $14 Million to Build Out Its Warehouse Space Marketplace

July 25, 2016
SCDigest Editorial Staff

Here is a simple fact: at any given time, in a given market area, some companies have more warehouse or distribution space than they need, and others are looking for additional space, perhaps on a temporary basis.

Supply Chain Digest Says...

Using this service means largely trusting an unknown third-party with unloading, storing and loading a company's inventory.

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Put those things together, and you have the potential for a new business, similar in a sense to the way Airbnb connects travelers looking for a place to stay with dwelling owners with a home or room for rent, but instead connecting those in need of warehouse space with those companies or facilities that have some extra space they can profitably rent out.

That's just what Seattle-based company called Flexe intends to do, and the start-up just took a big step forward when it announced last week that it has raised another $14.25 million in funding, led by an investment from Redpoint Ventures.

The three-year-old company has raised more than $20 million total, including a seed round from institutional angel investors.

Businesses using Flexe can forgo long-term warehouse leases and choose to store inventory for however long they want in a warehouse in a given market with open space. Flexe's website displays the prices for both loading and unloading pallets, as well as for storing the goods at individual warehouses.

The company says that is already has space available at more than 200 warehouses across 45 markets, representing at any one time over 10 million of available space and 400,000 pallet positions.

On the company's web site, you simply click "find space," enter a city or zip code and a pallet quantity, and prices are quickly displayed. The results below are from a search for space on the Cincinnati area, for 250-500 pallets, which brought back four results.

Flexe Operates a Market for Warehouse Space

 


Warehouse owners can also sign up to list space on the site. Flexe marks up the cost provided by the warehouse space owner about 20% as the source of its revenue. There is a 30-day, 50-pallet minimum, or a $500 minimum.


(Article Continues Below)

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The service is really designed for companies that want need storage for some period of time without committing to a long term lease. That could for a product test in a market, for example, or making the job of finding overflow storage when inventories get high easier that it is today.

"At any given moment," says founder and CEO Karl Siebrecht, "There are many, many businesses out there who have too much space, while other businesses don't have enough."

A real life example: a company that makes caffeinated club soda wanted to enter the L.A. market during the spring without committing to a long warehouse lease. Meanwhile, a Christmas-decoration warehouse nearby sat largely empty.

Voila - a match was made on the Flexe site.

But Siebrecht has bigger goals than being the sort of Uber of public warehousing. He wants Flexe to transform how companies think about warehousing as fundamentally as Amazon Web Services changed thinking about IT, shifting the model from one of with a lot of fixed costs to one that operates as a service that can be quickly turned on and scaled as needed - driven by rising ecommerce volumes.

"It allows you to potentially have this virtual network of facilities," says Siebrecht, "To push your inventory further out into the marketplace, without investing tons and tons of capital."

Of course, using this service means largely trusting an unknown third-party with unloading, storing and loading a company's inventory. A web search for "public warehousing in Cincinnati" brings back many results, but requiring individual follow up, not organized as a marketplace the way Flexe does it.

Additionally, non-3PL companies with extra space may offer lower rates than companies in the business of renting space.

What is Flexe going to do with its new millions? The company says it plans to expand the company's 20-person team by nearly 30 employees in the next year.


Are you seeing rising rates and tight availability in the markets where you operate? Let us know your thoughts at the Feedback section below.

 

Your Comments/Feedback

Anand Balkrishna

Title, Company
Posted on: Jul, 27 2016
 Happy to see this concept working. This was something that I ideated with a colleague but couldn't manage to put in play.

Matt

Not Provided, Not Provided
Posted on: Aug, 08 2016
I wonder how long this type of operation takes to get up and running?  Interesting concept, but the idea of risking a key product launch or seasonally high inventories to an unknown third party is worrisome. 
 

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